ObamaCare on the Brink

I hope you will forgive me for assuming the Obama administration was merely bumping their normal Friday news dump forward to before the July 4th holiday, with their announcement that they would effectively delay the employer mandate’s implementation for a year. This was not the case – instead, the much bigger news, and far more devastating to any remaining claims that Obamacare is being properly implemented, was buried on Friday: the news that the most significant entitlement increase since the Great Society will be operating on the honor system.

Sarah Kliff and Sandhya Somashekhar report: “The Obama administration announced Friday that it would significantly scale back the health law’s requirements that new insurance marketplaces verify consumers’ income and health insurance status. Instead, the federal government will rely more heavily on consumers’ self-reported information until 2015, when it plans to have stronger verification systems in place… After encountering “legislative and operational barriers,” the federal government will not require the District and the 16 states that are running their own marketplaces to verify a consumer’s statement that they do not receive health insurance from their employer… The federal government will, however, conduct an audit for the states where it is managing the new insurance Web portal. The rule also scaled back states’ responsibilities to double-check the income levels that consumers report, which determine any tax subsidy they receive.” Note the fun quote from Timothy Jost about how this is all totally cool.

Subsidize first, ask questions later. “We have concluded that the…proposed rule is not feasible for implementation for the first year of operations,” say the Centers for Medicare and Medicaid Services. “The exchange may accept the applicant’s attestation regarding enrollment in an eligible employer-sponsored plan…without further verification, instead of following the procedure in §155.320(d)(3)(iii).” And it’s not just there. The feds will also allow people to gain means-tested subsidized coverage on the exchanges without having to…test their means. “For income verification, for the first year of operations, we are providing Exchanges with temporarily expanded discretion to accept an attestation of projected annual household income without further verification.”

So now we finally have the answer we’ve been waiting for about the failed implementation of the massive data verification system they have been building to serve the exchange model: never mind. The government’s inability to build a system which interfaces with states and takes the necessary steps to check for eligibility has led the Obama administration to just throw in the towel for at least the first year. And this serves their aims in multiple ways: first, it makes it much easier to sign as many people up as possible to avoid rate shock, which is what they’re worried about; second, it means the administration allies can target their sign-up efforts on the 16 states where no verification is necessary; and third, it creates as significant a subsidy constituency as possible prior to the problems we’re likely to see during rollout.

Of course, the incentives it creates are completely warped. A modest lie about your income can push people who would’ve been on Medicaid, most of whom don’t file tax returns, to the far more generous exchange subsidies. The resemblance to the “Liar’s Loans” approach to the housing market collapse is uncanny. Never mind that CBO never scored an “honor system” version of Obamacare, or that the authority for such a step is dubious at best. House Republicans are certainly going to come back into town yelling to high heaven that the delays of the employer mandate and any eligibility checks amounts to a remarkable rejection of the rule of law. And many Democrats are quietly admitting that this implementation effort has turned into a giant cluster. But I see no incentive on the Obama administration’s part to go along with efforts to delay the law for a year, even though such a step would be more responsible.

Here is where the technocrat’s mask slips, and the ideologue smiles through. If the Obama team can get away with picking and choosing what parts get implemented and when, flaunting the law to satisfy their electoral aims, why not do it? Who cares if it explodes so many of the promises made during the law’s passage? (Of course, don’t think too hard about what the press would be saying if a Romney administration was undertaking similar steps.) Josh Kraushaar argues that Obama’s facing a crisis of competence. But who cares about competence so long as the lights go on for the one major domestic policy of Obama’s tenure? Give me implementation, or give me death.

Benjamin Domench is is a senior fellow at The Heartland Institute and publisher of The Federalist.
Domenech joined Heartland in 2009 after several years working and writing on national health care policy, beginning with a political appointment as speechwriter to U.S. Health and Human Services Secretary Tommy Thompson, and continuing as chief speechwriter for U.S. Senator John Cornyn during the Medicare Part D debate on Capitol Hill.
In addition to his work with Heartland and The Federalist, Domenech is the publisher of a daily subscription newsletter, The Transom, which is read daily by thousands of political insiders.
Domenech co-founded Redstate and hosts a popular podcast on market issues in the global economy -- and for which he won a "Sammy" award in 2011 — called Coffee & Markets.
In 2009 he was selected as a Journalism Fellow by the Peter Jennings Project for Journalists and the Constitution.